Opinion and Analysis
Don’t punish consumers in quest for wind power
Posted Monday, October 22 2012 at 21:58
The World Bank’s move to withdraw support for the giant Turkana-based wind power project has exposed a serious weakness on the part of the Energy Regulatory Commission (ERC) in executing its mandate.
An expert assessment by the World Bank revealed that the terms of a Power Purchase Agreement (PPA) handed to the Lake Turkana Wind Power (LTWP) project by Kenya Power would commit consumers to paying for excess power from the wind farm, hence its decision to withdraw guarantees it had agreed to offer the mega project.
About 70 per cent of the surplus electricity from the wind farm valued at about Sh8.5 billion would be paid for through consumer power, beating the logic of putting up the wind farm to reduce the high cost of power brought about by heavy reliance on fossil fuel generation.
This is not acceptable and the managers of the ERC, which is tasked with approving such power purchase or sale tariffs, owe the country an explanation.
The Energy Act 2006 mandates the ERC to, among other things, protect the interests of consumer, investor and other stakeholder interests.
The commission has failed to execute this function in the case of the Turkana Wind Power project, leaving consumers exposed to massive financial obligations
Despite the present low national power production capacity, such flawed deals should not be tolerated at the expense of consumers. We must find a sustainable option that will satisfy our energy needs without punishing consumers who are already strained by high cost of living.
Energy is critical to the country’s economy growth and expensive power dampens growth prospects.
Players such as Kenya Power and the Kenya Electricity Transmission Company (Ketraco) must also tread carefully to avoid committing to unsustainable financial obligations that could deal a devastating blow to their operations.
Energy projects are capital intensive and lack of sound planning could trigger dire financial consequences.
With such a high risk project, it would be prudent to implement it in phases.
The government and the LTWP must return to the drawing board and find the best implementation plan that would both ensure the smooth completion of the project and protection of consumers against excess add-on costs.